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SSLGC 06-21-2007 1- MJNUTES OF THE SCHERTZ SEGUIN LOCAL GOVERNMENT CORPORATION THE STATE OF TEXAS ~ COUNTY OF GUADALUPE ~ SCHERTZ SEGUIN LOCAL ~ GOVERNMENT CORPORATION ~ On this the 21st day of June, 2007, the Schertz Seguin Local Government Corporation convened at 1:40 p.m. in the City of Seguin Council Chambers located at 210 E. Gonzales, Seguin, Texas. The following members being present and in attendance: Members Present Robin Dwyer Ramon Cook Jim Wolverton Sydney Bauer Ken Greenwald Betty Ann Matthies Members Absent Hal Baldwin Also in Attendance Alan Cockerell Doug Faseler John Bierschwale Patrick Lindner Crockett Camp Bill Klemt John Wmkler ,--/ President Vice-President Secretary Treasurer Director Ex-Officio Ex-Officio General Manager Seguin City Manager Schertz Assistant City Manager Legal Counsel (Davidson &; Troilo) Consultant Hydrologist Consultant Consultant (Bury&Partners) Constituting a majority of the person~ appointed to the Board and a quorum for the transaction of business, and notice of sUch meeting having been duly given in accordance with the provisions of Texas Law. The first .order of business was the callin2: of the meetinl! to order. President Robin Dwyer called the meeting to order at 1 :40 p.m. The second order of business was public comment. No one addressed "the Board during public comment. The third order of business was approval of the minutes for the board meetin2 held on Mav 17.2007. Secretary Jim Wolverton made a motion to approve the minutes of the May 17, 2007, meeting as written. Vice-President Ramon Cook seconded the motion. Upon a vote being caned, the motion carried by unanimous decision. The fourth order of business was presentation of the Qeneral Mana2er's report - Alan CockereD. General Mana2er. A copy of Mr. Cockerell's report was included in the board agenda packet. Highlights of the report include the following: a. Water Production and Sales Mr. Cockerell referenced Monthly Water Sales and Seasonal Pumping charts which were included in the board agenda packets as he gave his report. He explained that water production for May was below amounts traditionally pumped due to the increased amount of. rainfall. He informed the board that Universal City plans to use water only during the peak summer season and again did not take water in May. b. Regional Water Alliance Meeting, May 31, 2007 A copy ofRWA's agenda was included in the board agenda packets. The Legislative Update Luncheon scheduled June 19, 2007, was rescheduled for June 26, 2007, in Schertz. Representative Robert Puente, Chairman of the House Natural Resources Committee, will provide an update on water related legislation. Governing bodies of all member entities which include board members and staff are invited to attend. Anyone planning to attend should RSVP. c. Gonzales County eGCUWCD Meeting, June 12, 2007 A copy of GCUWCD's agenda was included in the board agenda packets. A presentation was made by representatives of Caldwell County who requested to join GCUWCD. They represent a large area in Caldwell County which is the portion of land most affected by the proposed SAWS second well field in the eastern portion of Gonzales County. This area of land has the Carrizo Aquifer under it and is not covered by any underground district. Directors of the district will form a committee to research the request. eContested Case Hearing Status The one-day mediation session between all parties of the SAWS contested permits which was scheduled June 26,2007, was postponed until a later date, possibly July. eMonitoring WeD Measurements This section of the report was referred to Bill Klemt who would give an account of well water level measurements later on in the agenda. Board members were advised that water level measurements would not be taken at the well of one property owner as he had discharged a shotgun over the heads of Mr. Klerirt, Barry Miller and Mr. Cockerell and told them to get off his property. Mr. Miller had an informal discussion with the Sheriff to explain the situation. No formal action will be taken against the property owner, but in the future water level measurements will not be taken on his welL d. GCGCD Meeting, June 14, 2007 A copy of GCGCD's agenda was included in the board agenda packets. GCGCD has received 85 well registrations and 60 are in the Carrizo Aquifer. Requirements for verification of ownership of property for water rights assignment were discussed at the 2 meeting and Will be determined at a later date. The burden of proof of ownership of water rights under roads belongs to the county. Other Items: 1) Discussion regarding the Vickery Property was deferred to Executive Session. 2) Springs Hill and Canyon Regional toured SSLGC's treatment plant June 1, 2007. They are interested in constructing a similar facility on the Wells Ranch. Water Systems Manager Dan Drugan conducted the tour and answered questions. 3) Mr. Cockerell met with individuals from the Seguin Outdoor Learning Center to discuss the Corporation's operations in Gonzales County. He will continue these discussions in the future as the Board may want to consider ideas for better use of the property. 4) A Nixon-Smiley graduation ceremony was held June 1, 2007. Mr. Cockerell presented scholarships to Megan Tristan and Carmen Martinez. These students may attend a SSLGC Board meeting later in the summer. The fifth order of business was the SSLGC FY2007/2008 bud2:et and water rates - Alan CockereD. General Manae:er and Susan CaddeD. Director of Finance. Information pertaining to the budget was provided in the board agenda packets. Handouts regarding water rates were also given to board members. Several budgeted items were addressed and include the following: Mr. Cockerell stated that the Corporation's intent was to review the budget which included water rates at the June 21, 2007, board meeting and approve it at the July 19, 2007, board meeting. Schertz staff has requested that water rates be set and approved at the June 21st meeting in progress. This decision would be at the Board's discretion. Reference was made to SSLGC's proposed budget for FY2007/2008 and the Board was asked to look at current year budgeted figures and compare them to mid-point figures of the Year. The Corporation's numbers at mid-point appear to be misleading because it has not yet entered into the high-cost season of pumping, and high dollar accounts such as chemicals and electricity are low. FY2006/2007 estimates remain accurate and in line with proposed amounts. Mr. Cockerell directed the Board's attention to the utility services account where $735,000 was budgeted for FY2oo7/2oo8 compared to $650,000 budgeted for 2006/2007 and to $727,127 which was actually spent in FY2005/2006. He advised the Board that an adjustment for FY2006/2007 would be put on the agenda for the July 19, 2007, board meeting in order to increase the $650,000 which was budgeted for the current fiscal year and apparently low. Mr. Cockerell has asked that a copy of the monthly GVEC bill which is automatically paid be sent to him so that he can provide a better estimate of electricity expense. 3 Vice-President Cook advised the group that he had recently discovered that money had not been allocated for replacement of equipment in RepairslMaintenance or anywhere else in the budget. He added that approximately $100,000 per filter would be needed to change out filter materials in one filter can in the Gonzales County plant. The $100,000 includes the trip in and the trip out for all materials. Filter material has at best a nine-year life give or take for each filter. The Corporation has six filters which have been in service five years. In approximately four years $600,000 will be needed to replace filter material. In Mr. Cook's opinion between now and 2011, approximately $150,000 per year should be budgeted for replacement of the six filters. Mr. Cook proposed the money be budgeted as an operations expense in RepairslMaintenance, Filter Interior - Field Materials, and that $150,000 per year be allocated for the next four years to catch up and be made available for change out of the six filters. Mr. Cockerell added that samples from the filters had been taken and sent to Tonka for analyses and tests show that filter material is degrading. Some of the filters may have to be replaced sooner than 2011. Mr. Cockerell referred to the Water Rate Schedule for FY2007/2oo8 as the $600,000 for filter replacement would have to come from a water rate increase. For every $100,000 in the budget, the water rate is increased by $.03. Four and one-half cents would be needed for $150,000 and $.06 would be needed for $200,000. Estimated costs of$100,000 per filter for mter replacement were provided in today's dollars. In the future those same costs would increase therefore water rates may increase. Secretary Sydney Bauer suggested that instead of an allocation, a funded reserve be provided for the fdter replacement costs. Mr. Cockerell added that filter replacement is a regular expense every nine or ten years. From the initial onset of the project, filter replacement has not been budgeted for. Director of Finance Susan Caddell stated that presently $.03 of the water rate is being allocated to the Repair and Replacement fund until it is refunded to the required $500,000. The water rate could be temporarily raised until the fund is completely funded to account for the mter replacement, and then lowered when the initial $500,000 is replaced. Presently, two years will be needed to refund the Repair & Replacement fund to the required $500,000. After discussion, all agreed to budget for filter replacement in the Repair & Replacement Fund by adding $.06 to the water rate. Salaries were estimated to be lower in 2007/2008 because new employees had been hired and started at lower salary rates than previous employees who had been with the company for a number of years and at the top of the wage scale. Also, cost of living increases had not been entered into the salary rate, therefore, salary estimates for FY2oo7/2oo8 would have to be adjusted. Mr. Cockerell referred to the budget detail for FY2007/08 and Capital Outlay where actual figures for each budgeted account were derived. He reported that in 2002 Hanson Pipe submitted a request for the Corporation to perform cathotic protection on the pipeline. A basic one-time inspection was needed to assure that no undo erosion had occurred on the pipeline with a follow-up a year later. Based on the results a plan would be put in place to move forward. Warranties from Hanson for the pipeline could be affected if this maintenance is not performed. Mr. Cockerell worked with Bury+Partners to get quotes for the procedure in order to estimate the costs. This item was added to the FY2007/2008 budget. 4 Mr. Cockerell added that PM maintenance of high service pump controls was also included in the budget.. Purchase of a stainless steel pump was included in the budget for FY2007/2008. Purchase of a stainless steel pump for FY 2006/2007 would be discussed later in the agenda. Stainless steel pumps which were previously purchased at $22,000 each now cost $27,000 each. Twenty-five thousand dollars was budgeted in FY 2006/2007 for well mitigation in the Contingency Fund. Through discussion with Barry Miller Mr. Cockerell learned that GCUWCD was not addressing the contingency issue because of the SAWS contested case in process. Initially, the Corporation had requested receipts and releases from property owners for complaints regarding property damage that had been sent to Mr. Miller. Releases have not been received and checks have not been mailed. One property owner refused to sign a release in case of more extensive damage to his well. He preferred to take legal action against the Corporation if that damage occurred. President Dwyer directed Mr. Cockerell to withdraw the offer to the property owner. The Corporation has not received any additional complaints. The Contingency Fund would be addressed further in Agenda Item #6. Estimated costs which should be charged to the Corporation by the City of Seguin for rent, janitorial services, utilities, accounting time, vehicles, and water plant time spent by Water Utility Manger John Schraub for the Corporation were addressed. Information was provided in the board agenda packets. At the request of the Board, the City of Seguin calculated these additional disbursements for a total of $48,932.00 which should be included in the Corporation's budget. In regard to vehicles the line item in the budget shows the City is charging the Corporation for material, but not labor. The adjustment for labor will be included in the budget. After group discussion, all agreed the rent and janitorial rates should be based on average rates within the community. Janitorial charges of $.25 per square foot will be deleted and included in the $.75 per square foot for rent. Mr. Cockerell noted that these estimated charges had been included in the water rate and would be included in the budget. When the management services contract comes up for renegotiation October 1, 2007, these charges will be addressed again. After discussion board members and staff agreed that changes were necessary to the proposed FY2007/2008 budget. Mr. Cockerell deferred the official adoption of the FY2007/2008 budget to the July 19, 2007, board meeting as initially planned. Assistant City Manager Johnny Bierschwale again requested the water rate be agreed upon and approved at the meeting in progress. He said that the City of Schertz's policy is to give 60 days notice to its customers before a rate increase. In order to have the increase in rate be effective October 1, 2007, it should be approved by the Board at the June 21 st board meeting. He also requested that one of the Corporation directors be present at the Schertz City Council meeting when the water rate increase is discussed. Mr. Cockerell referred to the Cost Breakdown for Fiscal Year 2007/2008 handout pertaining to water rates. The exact process for determining water rates was explained in his manager's report. He added that before water rates could be set average water usage per day had to be detennined. The Corporation's master plan shows that water usage for 2008 would be 10.6 5 million gallons per day. Actual figures show the average water usage per day to be 8.0 million gallons per day. Using the 8.0 million gallons per day for water usage and the process addressed in Mr. Cockerell's manager's report, the water rate should be set at $2.18 for the Cities of Schertz and Seguin. The FY2007/2008 Water Rate Table shows that $.06 was added to O&M for filter media replacement for two filters changing the water rate for Schertz and Seguin from $2.12 to $2.18. President Dwyer made a motion to adopt the FY 2007/2008 water rate$ at $2.18 for the Cities of Schertz and Seguin, $2.33 for Springs Hill, and $1.52 for Selma and Universal City. Vice-President Ramon Cook seconded the motion. Upon a vote being called, the motion passed by unanimous decision. Seguin City Manager Doug Faseler added that a City of Seguin budget workshop would be held July 10, 2007, and invited members of the Board to attend. The sixth order of business was Resolution # SSLGC R07..09 to amend the 200612007 SSLGC Maintenance and Ooeratm2 Fund Bud2et of the Citv of Senin. Texas. to transfer funds from the Contin2:encv Fund to the Capital Bud2et - Alan Cockerell. General Mana2er and Susan Cadden.. Director of Finance. Mr. Cockerell referred to a memo from him explaining the adjustment and to Resolution # SSLGC R07-09. Both were provided in the board agenda packets. He said that the Corporation had ordered two stainless steel pumps and planned to order two more, one this year and another in 2008. The plan is to order eight altogether to replace the current cast iron pumps. Mr. Cockerell requested that $23,000 from the Contingency Fund mentioned in Agenda Item #5 be moved to Capital Outlay in order to purchase a stainless steel pump this year. Three to four thousand dollars from the Building Fund would be added to the $23,000 in order to purchase the pump which now costs $27,000. President Dwyer made a motion to adopt Resolution SSLGC R07-09 to amend the 200612007 SSLGC Maintenance and Operating Fund Budget of the City of Seguin, Texas, to transfer $23,000 from the Miscellaneous Contingency Fund to Capital Outlay. Treasurer Bauer seconded the motion. Upon a vote being caned, the motion passed by unanimous decision. The seventh order of business was additional fnnds for pinelineldrain valve repair - Alan Cockerell. General Mana2:er. Mr. Cockerell referred to a handout provided to the Board regarding drain valve repair. Initially the Board approved $150,000 in January 2007 for drain valve repair. He explained that weather had impacted the early estimates pertaining to the schedule and costs of the repair. Invoices totaling $180,451.00 which were listed in the handout make the approved $150,000.00 short by $35,187.13 to complete payment to Holloman Corporation and close out purchase order #34027. Money is available in the Repair/Replacement Fund, however, costs have exceeded the amount board members approved in January 2007. Mr. Cockerell requested Board approval for $35,187.13 to pay outstanding invoices to Holloman and to close out purchase order #34027. He added that planned drain valve repair on the 36 inch water line to Schertz had been completed for 2007. The first three valves which were repaired using mild steel bolts will be revisited to install stainless steel bolts, possibly next Winter. The repair will be included in the FY2007/2008 budget. 6 Secretary Wolverton made a motion to increase the approved $150,000.00 for drain valve repair by $35,187.13 to pay remaining invoices and to close purchase order #34027 to Hollomon Corporation. Director Ken Greenwald seconded the motion. Upon a vote being caBed, the motion passed by unanimous decision. Mr. Cockerell added that the pipeline at the Guadalupe River Crossing was shut down because of a leak. Repair of the pipeline is difficult at this time because of the high level of the river which covers the leak. Money has not been allocated for the repair and Mr. Cockerell asked the Board to approve an estimated $30,000 to Hollomon Corporation for repair of the pipeline. Bury+Partners Consultant John Winkler recommended procedures to address the repair so that additional problems would not occur in the future. He said that leaking had occurred due to shifting and the pipe was leaking at a 45 degree angle before going into the river. A full flange joint with a flexible connection tied together with stainless steel rods would be used to replace the uni-flange initially used for a more permanent repair to avoid future problems. Secretary Wolverton amended his motion to allocate money from the RepairlReplacement Fund to increase the approved $150,000.00 for drain valve repair by $35,187.13 in order to pay outstanding invoices to Hollomon Corporation and close out purchase order #34027 by including approval of a new purchase order for Hollomon Corporation in the amount of $30,000 to repair the leak at the Guadalupe River Crossing. Director Greenwald seconded the motion. Upon a vote being caBed, the motion passed by unanimous decision. The eiehtb order of business was sale of concrete rint!S - Alan CockerelL General Mana2:er Concrete rings were taken out of the ground when drain valves were repaired. The rings were left above ground on the easement. Several options to store the rings have been discussed in the past. One option considered was to bury the rings in place, but was considered to be poor construction and engineering practice, especially if future work was to be done in the easement. Previously, the Board expressed interest in storing the rings at the Booster Pump Station. Later, Mr. Cockerell received a quote from Hollomon Corporation to gather, remove and store the rings in the amount of $30,071.00. Presently. Mr. Cockerell proposes to dispose of the rings in the most economical manner possible by putting the rings up for sale on the City of Seguin's online auction service. Potential buyers would be required to remove the rings at their expense. He added that Corporation personnel would accompany anyone who picked up a ring to avoid trespassing issues with the landowners. Mr. Cockerell informed board members a landowner had already requested a ring be removed from the easement on his property. Board members directed Mr. Cockerell to first contact the manufacturer of the rings in case they might want them, and if not, to dispose of the rings in the most economical way possible. 7 The ninth order of business was the contract between SSLGC and Crockett Camp - Crockett Camp. Mr. Camp's contract continues on a month to month basis as previously agreed upon until a new contract is ready for negotiation. The tenth order of business was Water Lease Contracts for Guadalupe County - Crockett Camp. Proiect Mana2er. Mr. Camp deferred Agenda Item #10 to Executive Session. ,The eleventh order of business was Water Lease Contracts for Gonzales COUlltv - Crockett Camp~ Proiect Mana2er. Mr. Camp deferred Agenda Item #11 to Executive Session. The twelfth. order of business was Guadalupe Countv Project Statns - Alan Cockerell~ General Mana2er and John Winlder~ Burv+Partners. A Design/Review meeting was held June 18, 2007. A progress report prepared by Bury+Partners was included in the board agenda packets. Two technical memoranda were reviewed at the DesignlReview meeting, the SCADA system and treatment process. The SCADA system was reported to be working good although there is an issue with communication of the radios. Bury+Partners has suggested that the prospective contractor for SCADA services work directly with the Corporation and not through Bury+Partners. Radio issues will be addressed in both the new and existing plant. SCADA activity should be started before the construction process ~egins. Some procedures require implementation with the existing system to make it co~atible with the new plant. ,Bury+Partners in coordination with the Corporation plans to interview potential SCADA contractors in the next 30-60 days. A recommendation for t1e SCADA contractor along with projected costs will be presented to the Board at the next meting. Mr. Cockerell handed out a summary 0 the treatment process. Water chemistry and corrosion resistance to avoid degradation of filter media were addressed. Three alternatives for treatment process were reviewed. 0 ODS include caustic only, aeration, and lime and caustic. Option one would be to keep the nzales County plant using caustic only and use lime and caustic on the Guadalupe County lant. Option two, using aeration, has issues with on-going cleaning maintenance. With op on three, lime and caustic, the same process of corrosion control will be the same at bo plants. Lime will be introduced prior to the filtration process to control the pH. As th~ water is leaving it will be treated with caustic to refine the pH of the water. By' adopting a~ternative three, pH issues which break down the filter media will be addressed. Corrosion ~I processes will be similar at both plants. In Mr. Cockerell's and John Winkler's op~on, from an operati.onal point-of-view, option' three is preferred. The most efficient way to avoid degradation of filter media is by treating the pH with lime before filtration and refinihg the pH with caustic after filtration. In the new plant green sand filter media will be used vWth gravity concrete constructed filters instead of pressurized steel filters. .By adding lime ah~ad of the filters the life of the filter media will be significantly improved. This process also tkkes the water more blendable with the Edwards Aquifer water. The cost of caustic would ~e cut in half to save approximately $300,000 per year. Although more lime would be r it is much less expensive than caustic; I Approximately one and a half million dollars would be saved over time with option three. The one disadvantage of option three is that lime slightly increases the hardness of the water. Mr. Cockerell thanked Vice-President Cook for his attendance and participation at the Design/Review meetings. Another meeting is planned for July. The thirteenth order of business was the Operations Status Reoort includini! pioeline and well reoair - Dan Drui!an. Water Systems Manai!er. Water Systems Manager Dan Drugan was on vacation and Water Utility Manager John Schraub gave the Operation Status report in his absence. On May 24, 2007, the windings burned up on Well #5 and the motor was lost. On May 25,2007, the motor from Well #8 was pulled and installed on Well #5. Well #8 was not operational at the time as it was leaking from the pump shaft at the wellhead. Peerless Equipment, Ltd., installed a new "0" ring, stuffmg box and top piece of oil tubing on Well #4 and returned it to service on May 31,2007. Peerless installed a new "0" ring at Well #8 and returned it to service June 13, 2007. On June 20, 2007 a new time delay relay was installed on Well #6. All wells except for Well #1 are presently in service. Well #5 is resting and the cities are being comfortably maintained by five wells. By July 2007 all wells should be operational. On May 29, 2007, a leak was discovered at the Guadalupe River Crossing. Hollomon Corporation is monitoring rainfall and water level at the river so that they can repair the leak as soon as possible. The fourteenth order of business was oresentation of consultant reoort- Crockett Canto. Consultant. Mr. Camp deferred Agenda Item #14 to Executive Session. The fifteenth order of business was oresentation of consultant reoort - Bill Klemt. Hvdrolomt Consultant. Mr. Klemt reported that early summer water levels had been measured to check on reservoir performance and to set baseline water levels. Water levels are high due to the amount of rain received in the past few months. Forty-seven wells were measured in cooperation with the Guadalupe and Gonzales districts. Average water levels this summer are approximately .5 ft higher than in January. Four wells in the well field proper show a slight decline of apout 1.6 ft which is expected. In Mr. Klemt's opinion the reservoir continues to perform as expected and should continue the same good performance in the years to come. His written report regarding early summer water levels will be available in July. President JAf1J'er closed General Session at 3:22 p.nt. The sixteenth order of business was Executive Session called under Chavter 551 Government Code.. Subsection 551.071. to seek the advice of its attorney on leeal matters relatin2: to the Board of Directors' ri2:hts and liabilities under certain contracts and Section 551.072 to deliberate the ourchase of certain real estate. Executive Session was held from 3:36 p.m. to 4:45 p.m. President Dwyer closed Executive Session and opened Regular Session at 4:45 p.m. 9 The seventeenth order of business was to consider and take action as a result of Aeenda Item #16. As a result of Executive Session: President Dwyer called the meeting to order and reverted to Agenda Item #10, water lease contracts for Guadalupe County, and Agenda Item #11, water lease contracts for Gonzales County. Secretary Wolverton made a motion for the Corporation to enter into a lease agreement with the Quien Sabe Ranch with tenns discussed in Executive Session and to direct ~roject Manager Crockett Camp to continue negotiations with Hilmer Blumberg and other potential water lease clients in Guadalupe County in the best interest of the Corporation. Treasurer Bauer seconded the motion. Upon a vote being caned, the motion carried by unanimous decision. The eiehteenth order of business was additional Board of Directors discussion and/or comments. No new discussion and/or comments were discussed. The nineteenth order of business was adjournment. President Dwyer declared the meeting adjourned at 4:47 p.m. The next regular meeting was scheduled for July 19, 2007, in Schertz. MINIJTES APPROVED lIDS I qft DAY OF ~ 2007. ~TURE OFDJRECTORS . -K~V, W Robin V. Dwyer, resident ~~ Vice-President ~'Drer 4AmJ ~~ Ken' Greenwald, Director I I I I .1 10